As global stocks sank for an eighth straight session on Friday, hitting the performance of many hedge funds, some top managers are profiting from trades such as exposure to gold, which is up 11 percent since the end of June as investors run for safe havens.

Funds have also made money shorting European bank stocks and betting against the debt of companies in sectors such as financials, cyclicals and telecoms.

And anecdotal evidence suggests managers have moved away from bets on CDS (credit default swaps) on countries such as Greece, Portugal and Ireland, and are now betting on the next tier of countries, such as Italy, or on countries like France whose CDS are already moving on worries over the euro zone's problems.

"A lot of people are taking bets in sovereign risk, either as protection or taking a view (on what's going to happen)," said one fund of hedge funds manager who spoke on condition of anonymity.

"France has definitely grown in popularity. Portugal, Ireland and Greece are quieter than six months ago. Funds have maybe moved onto the second tier of risk."

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LNG Capital's chief investment officer Louis Gargour recently told Reuters he recommended shorting countries such as Italy and Spain and said he is short European bank debt.

The average hedge fund has lost more than 3 percent this year, according to Hedge Fund Research's HFRX index, with many struggling for good ideas and opting to slash their bets over the summer for fear of further losses.

Pedro de Noronha, managing partner at Noster Capital, which is up 7.1 percent so far this year, wrote to clients on Thursday saying that, apart from early 2008, his fund "has never been as defensively positioned as it is now."

But some of the world's biggest hedge funds are making the right calls.

Brevan Howard's $25 billion Master fund gained 2.2 percent in July, taking year-to-date gains to 4.7 percent, having taken bets on and off the table this year and opted for short-term positions.

"We've been tactically trading all year rather than taking advantage of any big themes," said one source close to the company.

Man Group's <EMG.L> flagship $23.9 billion AHL fund, a computer-driven fund that follows market trends, jumped 5.2 percent between July 4 and August 1, helped by long positions in fixed income, silver and gold, and short positions on the U.S. dollar.

Armstrong also said he had been buying Telefonica and France Telecom this week, as both now yield 10 percent, as well as dividend futures contracts on the EuroStoxx 50.

CQS's Credit Long-Short fund rose an estimated 1.64 percent in July, taking year-to-date gains to 4.71 percent, helped by a net short position and bets that sectors such as cyclicals, telecoms and utilities would be hurt by austerity measures taken by indebted governments.

Alder Capital's $630 million computer-driven Global 20 Fund returned 8.8 percent in July after betting against the euro and dollar versus sterling and the Australian dollar.

"We have considerably less risk on the table in August because the market is choppy," said founding director Brian McCarthy. "If you had the same positions on now that you had at the start of the month you'd be in a right mess."